So how does a not-for-profit organisation record a $50 million profit? This was the result tabled by Racing Victoria at its AGM today which was pre-empted with a column in the AFR on Monday by John Stensholt.
This is an extraordinary result considering the not-for-profit business model of a Principal Racing Authority (PRA) which is to plough any and all profits into prize money, infrastructure and integrity services.
CEO Bernard Saundry has made the comment of a possible ‘Future Fund’ but you would suspect any and all projects and initiatives for Racing Victoria are going to be given the green light.
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This comes on the back of a positive result for the Melbourne Racing Club, and I suspect a record profit for the VRC. Contrast
with Perth Racing releasing (without a press release I might add) an operating loss of $4M amid tough times, and the ATC likely to lob a loss considering Day 1 of the Championships was a washout, plus the write off of TVN as an asset.
The changes in the wagering model adopted in 2014 by Racing Victoria have been a major success with huge increase in race fields wagering revenue. RV charged online bookmakers a fee based on turnover, with a flexible rate that increases for major races including Group races and listed races. In addition, parimutuel or tote betting fees were also upped for significant races.
This, in turn, has served to place other states under pressure as evidenced by the Racing Queensland resulting loss, and projection of larger losses to come.
If your residents and your home state tote customers are betting on somebody’s premium product or migrating to corporate bookies you are in a world of pain. South Australia, Tasmania, and Queensland, are going to suffer similar fates with only the major restructure of wagering deals able to save prize money levels in those states.
WA have a chance because they are going privatise their tote which will raise significant once-off revenues to drive new growth.
But the big elephant in the room is Racing NSW.
What profits will they report this year and although they won the state government over with tax parity, it is being phased in over five years.
Where Victoria have really excelled is the introduction of the ninth race to metro meetings and the expansion of night racing footprint which is without competition from the other states in thoroughbreds.
That, combined with the new media free-to-air platform of Racing.com gives punters outside of Victoria better service than the local product and thus RV will reap the race fields wagering turnover increases.
From the report and the AGM which I attended todaym the purchase of Best Bets and Winning Post looks a good investment that will deliver profits of approx $600K annually. Purchase price was $8.6M. The www.racing.com domain name is on the books as an asset with a value of over $900K.
Legal fees were higher at $2.5M and RV spend a lot on marketing at $5M. In contrast RNSW only spend $1M and this was up from paltry $600K the year before.
RV’s annual result also revealed the profits for RISA/Racing Australia for the year at $2.8M with Racing Victoria and Racing NSW joint 35% owners. I look forward to the first annual report of Racing Australia as promised by John Messara when asked by 3WNC.
One of the very few questions from the floor was in regards to board expenses which surprisingly is not disclosed in the report. Mirth followed, with the Chairman David Moodie and other directors laughing and saying not much – but my estimate puts it as high as a $1M expense. Once again, in contrast, Racing NSW is $590K.
There were no questions regarding cobalt enquires, track firmness, reserves in the Melbourne Cup, or other issues that take up racing space in the media. Just cold hard cash.
So as we continue to enjoy the Melbourne Spring carnival – spare your thoughts for all the other state racing jurisdictions as their punters bet on Melbourne races and add to the cash vault of Racing Victoria.
They will now be struggling to maintain, let alone increase prize money levels for participants.
Less prize money will lead to less participation and wagering and the tough cycle will continue.
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